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Japan in Trouble Over Export Freefall

Japan, already in a tenuous period at best regarding economic growth, received scary even if unsurprising trade numbers to start the week. And it could very well lead to only the second overall annual trade deficit for Japan in decades.

Japan’s trade deficit problems accelerated this month as export levels dropped 14.% in September when compared with September 2011. Like many developed economies, Japan’s growth is heavily tied to export levels and has been affected significantly by the European Union debt crisis and the recent Chinese consumption slowdown. However, complicating matters much more in Asia has been the increasingly heated row between officials China and Japan over control of some islands near both. As such, the pullback of purchasing/importing on the China has been particularly noticeable for companies based in Japan.

Of particular note are statistics for automotive exports from Japan to Brazil, down just a few points short of 50% in September. In fact, U.S. television news channels have regularly run images of anti-Japanese sentiment in China, showing itself in cases of mass vandalism at dealerships of Japanese-made vehicles, among other places. It’s all having a negative impact on all-important business confidence, especially that of manufactures. In fact, it has been reported that polls of manufacturers’ confidence levels have not been as low as the present month at any time since April 2011, the first after Japan was hit by the earthquake/tsunami/nuclear plant leak triple-disaster.

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